Starting a small business is risky. According to the U.S. Small Business Administration, approximately 50 percent of new businesses last five years or more, and only about 33 percent last 10 years or more. Shop Talk reporter Virginia Bridges reached out to David Grant, Raleigh SCORE chairman, who, with the help of other SCORE volunteers, shared the top five reasons why small businesses in the Triangle fail. Here are the edited comments:
1. Running out of cash: Most businesses start self-funded. Owners put in some of their own money and don’t take money out. At some point, the owner can no longer afford to contribute financially and must close the business.
2. Getting burned out: Almost everyone who owns a business puts in long hours to make it successful. However, most people can’t keep that pace going for the long term. It’s easy to lose the passion and drive that you had when the business started.
3. Being complacent with customers: It’s important for small-business owners to not take customers for granted. Whenever you come in contact with your best customers, take the time to recognize them, ask them for input and find out what you can do to improve. When owners stop interacting with customers, those people feel that you don’t care and look elsewhere.
4. Changing competitive landscapes: If you become successful, other businesses will try to compete with you. Competitors might differentiate themselves by offering other products and services with lower prices, shorter lead times and better guarantees, value and quality. Your business’ survival depends on how you react to the competition. Learn about your competitors and how you compare to them.
5. Shifting technology: If your business provides a technology service, keep up-to-date on training and customers’ demands. If your business develops a technology product, don’t overdesign the product when the competition offers something simpler. Stay up-to-date with interfaces between customers and suppliers. It’s important to be able to easily transfer information. Don’t develop an application without input from users and customers.